Can Stablecoins Beyond USD Gain Traction?

The stablecoin market has grown significantly, with a current value of over $235 billion, demonstrating a strong faith in the future of these digital assets. However, the market is dominated by USD-backed stablecoins, such as USDT and USDC, which together hold about 90% of the market share. Other stablecoins, including those pegged to the euro, have struggled to gain traction due to liquidity challenges. The lack of deep and sustainable liquidity is the primary factor limiting the growth of non-USD stablecoins, as it determines their ability to become widely used financial tools. For non-USD stablecoins to compete, they must address the liquidity gap by developing more effective liquidity algorithms and establishing deep liquidity pools between USD and non-USD stablecoins. This can be achieved by refining automated market maker algorithms to make liquidity provision more efficient and attractive for providers. The key to viable non-USD stablecoins lies in building models that make providing liquidity profitable, as this will align financial incentives and drive adoption. Looking ahead, non-USD stablecoins may gain a competitive edge in specific use cases, such as cross-border remittances and decentralized lending, particularly for businesses that operate globally and need to manage cash flows in multiple currencies.